Finland - Employment

Employment

In 1986 the civilian labor force numbered a little more than 2.5 million, of which about 5.4 percent were unemployed. Less than 11 percent of the workforce worked in agriculture and forestry (down from over 45 percent in 1950). Employment in industry and construction amounted to about 32 percent, while the service sector employed a little over 57 percent. Finland's employment structure resembled that of other European countries, except that agricultural employment was still higher than the West European average, and industrial employment had fallen more slowly in Finland after the 1973 oil crisis than it had elsewhere. Economists suggested that both phenomena reflected Finland's relatively late industrialization and that the country could expect further declines in the employment shares of agriculture and industry.

As in most European countries, general unemployment became a serious problem during the 1970s, rising from about 1.8 percent in 1974 to an average of about 5.7 percent between 1980 and 1986. Official statistics showed that unemployment had fallen to 5.5 percent for the first half of 1987, but this figure had resulted from redefining unemployed workers over 55 years of age as retired. The number of unemployed persons actually had barely changed between 1986 and 1987. Despite economic growth, during the early 1980s total demand for labor stagnated, but the working-age population increased by an average of 1.2 percent each year. Economists estimated that real GDP would need to rise by over 3 percent per year in the late 1980s and early 1990s just to keep up with the growing work force.

While unemployment was less severe in Finland than it was in most European countries, policy makers considered the job shortage to be the country's main economic problem. Young people suffered most from the rise in unemployment. In the late 1980s, the unemployment rate for people between the ages of fifteen and twenty-four was almost twice the overall average. The aging of the population would tend to reduce the youth unemployment rate in the 1990s, but observers predicted that the total population of working-age persons would continue to rise for at least a decade and that unemployment would be a serious problem.

Although many workers could not find jobs, some employers reported difficulties in finding skilled industrial workers; in particular, construction and service workers were hard to find in the booming Helsinki area. Although certain skills might be in short supply, the work force generally was competent and hardworking. Indeed, during the postwar years, the number of Finns with vocational training had increased fourfold, and the number of university graduates had increased fivefold. The graduates of Finland's management schools were well prepared to meet the challenges posed by an increasingly international business environment. Some managers argued that young Finns showed more initiative on the job than their parents.

The government tried to cope with unemployment, focusing on youth joblessness. Aside from expanding public employment, generally seen as a stopgap, state efforts included retraining programs for unemployed workers, advanced vocational training, travel and resettlement allowances, and subsidieq for housing in areas with labor shortages. A particularly effective mechanism was the nationwide employment exchange, which brought together people seeking employment with potential employers. In the long run, however, such measures could only serve as palliatives. Analysts believed that the state could best increase employment by following sound macroeconomic policies and by facilitating cooperation among the organizations representing labor and management.